Our nation’s electricity grid is overstretched. Our greenhouse gas emissions continue to climb. What could possibly reverse this trend? Look no further than over your fence.
In a Senate hearing last week we heard from Adrian Tuck, CEO of fast-growing technology start-up Tendril that helps consumers understand and manage their energy use. When consumers see their energy consumption information on their Tendril iPhone app or in-home energy display they make smarter decisions and waste less energy.
Tuck testified that, generally speaking, consumers are motivated to save energy in one of three ways: saving money, saving the planet, and beating their neighbors.
Which one was the most effective at driving consumers to cut their consumption? Yep. You guessed it. It turns out many consumers are more motivated to beat their neighbor in energy savings, rather than save money or save the world.
It makes sense when you think about it. We’re social beings, and often make decisions in social contexts. The science behind this is called behavioral economics. There is a rich panoply of motivations (social, cognitive, emotional) that drive the economic decisions we make. Think Malcolm Gladwell’s Blink and Dick Thaler and Cass Sunstein’s Nudge.
OPOWER, another fast-growing start-up, is an example of a company that uses behavioral science to improve electric utility energy efficiency programs. How does it work?
Working closely with a utility, OPOWER mails a color, one-page report to customers. Although it’s branded with the utility logo, the report deviates from the hard-to-understand bill we’re accustomed to receiving.
To start, less is more. They provide simple graphs that make it easy to understand how much energy you used last month, and how that compares to the months prior.
Next, it’s not really a bill. OPOWER doesn’t show a total bill amount or ask you to send money—it’s simply a supplemental information sheet about your energy usage.
But you’re not alone. Your energy consumption is also put in the context of an average of similarly-sized neighbors. Although the group data is anonymized to strictly protect privacy, you can see if you are an energy hog or and energy miser compared to your neighbors.
It’s a bit depressing to discover that you use 32% more energy than your most efficient neighbors, but it makes you want to start improving your score today.
And rather than getting a long list of efficiency ideas, you’d see only a few “relevant and immediately actionable” energy efficiency suggestions. For example, OPOWER might remind renters that they can save significantly by turning up the thermostat during summer months, or remind families before thanksgiving that it’s actually more efficient to use the dishwasher than do the dishes by hand.
And they’ve shown results. For nearly two years OPOWER has put this approach to work in partnership with Sacramento Municipal Utility District. They have averaged a 2.5% reduction in consumption across 35,000 homes, with stronger results in the second year than the first. The company is now applying its approach with twenty-five utilities and sending reports to a million homes each month. According to OPOWER, their participation rates are also much higher (up to 80%) than traditional utility-run energy-efficiency programs (typically less than 5%).
It just goes to show that utilities and their regulators don’t necessarily have all the answers, and as policymakers, we should be wary of claiming that we know exactly how consumers will interact with energy data. We shouldn’t be asking what is the “right message” or the “right amount of information” to present to customers to incent energy efficiency.
Rather, we should be asking how we can put energy data in the hands of consumers and entrepreneurs in ways that are 100% grid secure and use the very best practices of digital privacy.
The companies discussed above are very different. Tendril can show you real-time energy usage on all kinds of devices in the home, including your TV. OPOWER, on the other hand, mostly sends a paper report via the mail on your historical usage.
But both companies present information to consumers in new ways, create high-paying jobs, and, of course, help you edge out the Joneses next door.